Home / News / India /  Revenue department unearths IGST refund fraud by top exporters

NEW DELHI : During a crackdown to check the misuse of IGST (Integrated Goods and Service Tax) funds by star exporters, the Central Board of Indirect Taxes (CBIC), through a sample study of 241 cases, has identified at least 9 star export houses that are untraceable and 82 such exporters whose declarations before income tax and GST have significant variance.

The CBIC has extensively used data analytics and matched data with income tax, GST and customs to identify risky exporters. In two cases the premises of the exporters were also found sealed and seized by the banks as the exporters had been declared NPAs.

“There are instances where an exporter with over 50 crore of exports of readymade garments has taken refund of 3.90 crore while the entity’s total GST payment in cash was a merely Rs1650. In another case, tax payments in cash have been found as 51,201 while the exporter has obtained refund of Rs9.59 crore. Investigators are of the view that all such cases involve fake invoicing and fraudulent tax credits, which have been encashed through the facility of IGST refunds," a finance ministry official said on condition of anonymity.

The official said the sample study has shown that 40 had declarations of turnover from business ranging from ‘NIL’ to less than Rs1 crore in financial years 2017-18 and 2018-19. Star export houses that enjoy reduced customs inspections are recognized under the Foreign Trade Policy by virtue of their export performance being above a certain threshold, which is presently $3 million in current and previous 3 financial years.

Alarmed at the misuse of IGST refunds by exporters of star status, the CBIC has referred the matter to Directorate General of Foreign Trade seeking a more robust accreditation process and taking necessary actions as per law.

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